Baffling Ways The Government Spends Tax Dollars

In 2010, the U.S. government took almost $1.2 trillion from American families through individual income taxes alone, according to IRS data. According to the Tax Foundation, a tax research group based in Washington, D.C., Americans worked from Jan. 1 through April 17 this year just to earn enough income to pay all the federal, state and local taxes they're legally bound to pay.

With so much money flowing into government coffers and Americans working so hard to fund government activities, you would hope that government officials were spending that money prudently. In many cases, they aren't. Rather than focusing on protecting Americans' safety and property rights through essential functions like national defense and the court system, the federal government is squandering your money on the following projects.

Robot Dragons, Video Games, Christmas Trees, Snow Cone Machines and ChocolateAccording to "Wastebook 2011: A Guide to Some of the Most Wasteful and Low Priority Government Spending of 2011" by Senator Tom Coburn (R-OK), the federal government gave $113,277 to The International Center for the History of Electronic Games, an organization that collects and studies video games. The feds also gave almost $50,000 to the second annual Hawaii Chocolate Festival, where visitors had the opportunity to taste 10 different chocolates, chocolate vodka, chocolate beer and chocolate popsicles, all for the stated purpose of supporting Hawaii's emerging cacao industry.The federal government spent another $75,000 to help Michigan promote its already successful Christmas-tree industry (the third-largest in the United States), $130,987 for dragon robots that are supposed to teach language skills to preschoolers and $6,279 to purchase snow cone machines for emergency management services, also in Michigan.

In 2011, another $1 billion went toward tax credits for energy-efficient home improvements for individuals who don't own homes, including children and inmates, according to Coburn's report. It seems safe to assume that other tax credits are being similarly abused. The cheaters are unlikely to be caught, given the lack of documentation that must be submitted with a tax return to claim many credits.

Coburn's report implores taxpayers to ask themselves, "Do these initiatives match your understanding of the role of the federal government as outlined by the enumerated powers of the U.S. Constitution?" and "Do these represent national priorities or do they reflect the wasteful spending habits threatening to bankrupt the future of the American dream?"

Taxing and SpendingWhen you send $1 to the government, it doesn't provide $1 worth of services. In fact, it doesn't even come close. James Payne, a research fellow at the Independent Institute, an education organization that studies critical social and economic issues, has quantified the financial losses to our society from the tax system. In his article, "The Unnoticed Deficit That Makes Us $6 Trillion Poorer," Payne writes that the overhead costs of the U.S. government amount to $5.7 trillion in lost economic productivity, or approximately $18,000 per person. These figures tell us how much money is wasted through the government's process of taking money from one person and giving it to another.

The $5.7 trillion in lost economic productivity consists of six costs, including disincentive costs from taxes that discourage productive economic activity, compliance costs associated with the challenges of understanding and preparing tax returns, and government costs to run and support the IRS.

Add in Administrative CostsFurthermore, there are administrative costs to run the agencies that redistribute taxpayer dollars, over-and under-consumption costs from people consuming more or less of a good or service when the government foots the bill, and lobbying costs when special interest groups pay professionals to curry valuable favors from the government.

"When government spends $100, the country winds up being $116 poorer than it would have been had that taxing and spending not occurred," Payne writes. He suggests that the government stick to providing essential services that only the government can provide and let the private sector provide goods and services like "education, scientific research, pensions, healthcare, charity, arts and roads."

The Bottom LineThe government has no business spending your money on items like those described in Coburn's report. If it cut these and other instances of extravagant spending, the government wouldn't find it necessary to spend $30,015 per household annually in funds that must first be taken from honest, productive, income-earning citizens. We could dramatically shrink the federal budget deficit and improve economic productivity, raise living standards, and relieve cash-strapped households in the absence of such waste.